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PAY ONLY AFTER HIRING REFERRALS TO YOU NEW HIRE
An effective employee referral program should be an integral part of any employee recruiting process. There are many recruiting sources that can be used for your employee recruiting and it is not necessary to limit activities to any single source.
Referrals from existing employees have been shown to be some of the best employees. The study for the pay only after hiring the employees referred by existing employees perform better and last longer on average. There are many benefits from a well designed and implemented employee referral program in addition to getting better employees.
The first area of improvement is a significantly reduced cost per hire for brings on new employees. Employee recruiting is expensive. Running ads, posting on-line and using headhunters all cost money. In many cases multiple sources will be used to build a candidate pool and the costs add up.
But giving existing employees a referral bonus can be much more cost effective. There is only one payment. Calculate an amount that is both attractive to your employees and cost effective for the business. A good recommendation is 20-25% of the normal cost per hire number.
Hire employee by referral
Decide if there will be different levels of payment. It is possible to pay a different amount for professional positions versus hourly jobs for hiring the employee for a new hire. Also, there might be a special bonus for critical, hard to fill jobs. Once again, needs and common sense should dictate these decisions. Next, determine how to pay the bonuses. Some organizations pay the bonus the day the new employee starts. Some wait until 90 days or when the probation period ends.
My recommendation is a combination model. Pay half of the bonus for the new hire for that day the person starts and the remainder at the end of the probation period.